The legal definition of "affordability" is key to who exactly will get the 10,000 recently promised starter homes, writes Padraic Kenna
Who will be the lucky buyers of the Government's new "bargain" homes? The new "starter home" initiative, with a subsidy of some €60 million of State or public land, is hailed as a victory for those whose rights to secure and affordable housing are not being met by the market. But who will be the "lucky" buyers of these 10,000 bargain homes?
Governments in modern housing market economies have important roles as enablers and providers of the basic framework for the housing sector as a whole, establishing and regulating the institutional, infrastructural, quality, financial and property rights systems that underpin the sector. A key government role is to enforce the law in these areas and, of course, to provide social or subsidised housing for those unable to enter the market.
In Ireland, whole-hearted support and reliance on the housing market is relatively recent. In the 1960s and 1970s, the task of meeting the housing needs of workers in the first industrialisation and urbanisation journey of the Irish State was offered to the new breed of housing "developers".
The tribunals are now revealing the dark circumstances of this birth of the Irish housing market and casting some doubts on its pedigree. Compliance with planning and other laws, such as they existed, appears to have been "overlooked", and were largely unenforceable by the State.
Traditional public housing had created a base of good housing stock, but the State then built some archipelagos of housing at the edges of our expanding towns and cities, some of which have since scarred the lives, families and communities of many citizens.
In all industrialised societies, the state intervenes in housing markets, tempering the "iron law" of supply and demand, and dealing with the externalities of the market, such as the universal tendency for those on low incomes to be excluded.
Historically and internationally, the level of such intervention reflects the balance of power in industrial societies between capital and labour. In Ireland, almost all the political parties and our contemporary social partnership agreements have, until now, avoided the issue as a political litmus test. Awareness of housing costs as essential elements of the living costs of workers and their families, and ingredients of wage negotiations, is a new phenomenon.
Today, in a second wave of urbanisation, the trade unions as social partners, are claiming some credit for the State development in Irish housing policy, to allow some of their members to buy "affordable" homes.
The Taoiseach has emphasised that this will not affect the €6 billion commitment in the National Development Plan (NDP) to social, affordable and shared-equity housing, of which 9,000 units were completed or acquired by local authorities, housing associations and co-operatives in 2002.
"Affordability" has, of course, already been legally defined by the Planning and Development Act 2000. This established a historical benchmark, stating that where costs of a 25-year mortgage at 5 per cent APR, based on 90 per cent of the value of the property, exceeds 35 per cent of the owners net income, it is not affordable. Indeed, this measure was used to calculate the need for social and affordable housing within the Local Authority Housing Strategies prepared some 2 years ago.
That statutory exercise, which did not rely solely on waiting lists as indicators of need, was the first national and local analysis of the extent of exclusion from the housing market of emerging new households.
The proportions of new households who would not be able to buy even the cheapest house up to 2006, were 45 per cent for Fingal and South Dublin, 53 per cent for Dún Laoghaire/Rathdown and up to 55 per cent for Wicklow.
Of course, Part V of the 2000 Act had provided that the proportion of developments to be earmarked for social and affordable housing was capped at 20 per cent of new schemes. Even our NDP, which envisaged that approximately 15 per cent of new housing would be within the social and affordable categories, underestimated the extent of market stratification that has taken place.
However, the large number of households caught outside public housing eligibility rules, but also below the high-income thresholds for market entry, remains significant, and it is this group that the new initiative appears to address. Interestingly, the UK Town and Country Planning Act 1990, on which Part V of our 2000 Act was based, allows up to 50 per cent of new sites to be secured for affordable housing.
The Housing (Miscellaneous Provisions) Act 2002 defines an affordable house as one made available for sale by a local authority at a price less than the market value.
Like most housing legislation, this Act allows the Minister to make regulations relating to the classes of persons to whom affordable houses may be made available for sale, the manner in which the price will be determined, eligibility criteria, building standards, and provisions relating to mortgage protection and deposits. Of course, if the buyer sells the house within 20 years there is a small repayment to be made.
So who will be the favoured beneficiaries of the State's or public's largesse?
The making of public housing allocation schemes is a function of councillors, and allocating these new bargain homes could become very politically rewarding.
Indeed, Section 8 of the 2002 Act appears to permit a residency requirement for applicants, and allows a local authority to have regard to other matters, as it considers appropriate, in establishing an allocation scheme. While the Minister may make regulations in this respect, there is no provision in the 2002 Act for the Minister to sanction the policy established at local level. This is a significant departure from the major 1966 and 1988 housing legislation, where local allocation schemes had to be ministerially approved.
Aside from the concerns about sustainable planning, provision of facilities for children, schools, etc as part of these major housing developments, some new legal and policy frameworks are placing boundaries on the allocation of public housing resources.
The Housing (Miscellaneous Provisions) Act 1992 obliged local authorities to draw up and adopt a written statement of their policy to counteract undue segregation in housing between people of different social backgrounds. This was reiterated in the Planning and Development Act. The Equal Status Act 2000 prohibits discrimination in the provision of accommodation.
Will our new affordable housing integrate older people, people with disabilities, people on low incomes and others? Will the State honour its ratification of the Revised European Social Charter to facilitate the reunion of the families of migrant workers here? EU regulations dating from 1968 require that non-national workers and their dependents are entitled to the same social benefits, including access to housing, as Irish nationals.
Significantly, a new EU directive on equal treatment between persons irrespective of racial or ethnic origin specifically applies to "access to and supply of goods and services which are available to the public, including housing". This directive obliges member-states to adopt the laws, regulations and administrative provisions necessary to comply with this directive by July 19th, 2003.
The development of this housing initiative cannot be left to generalised sentiments if we are to honour our legal and social inclusion commitments and maintain a coherent housing policy in the State.
Dr Padraic Kenna is a lecturer in law at NUI Galway and board member of the Irish Council for Social Housing.